Cetelem SA v Roust Holdings Ltd

The court may grant urgent interim relief in support of arbitration before arbitral proceedings have formally begun where the applicant is a proposed party to those proceedings. The jurisdiction under section 44(3) of the Arbitration Act 1996 is permissive and is not confined to proceedings already on foot. Relief must remain supportive of arbitration and must not ordinarily determine the dispute reserved for the arbitrator. A mandatory injunction is exceptional, but may be granted where urgency and fairness require it and the order carries the lower risk of injustice. The order must be sufficiently clear, practicable and enforceable. A worldwide-freezing-order authority may be distinguished where the contract is governed by English law and London is the agreed arbitral seat.

Cetelem SA sought continuation of a freezing order and a mandatory injunction against Roust Holdings Ltd in connection with a share purchase agreement. The agreement was governed by English law and provided for ICC arbitration seated in London. Cetelem sought an order requiring Roust Holdings to take reasonable and lawful measures to procure documents and signatures needed for an application to the Central Bank of Russia, whose approval was a condition precedent to completion.

Roust Holdings challenged the court’s jurisdiction, contended that the proposed order was impractical and insufficiently specific, and relied on the absence of launched arbitration proceedings and on authorities concerning worldwide freezing orders and mandatory injunctions. The central issues were whether section 44(3) permitted urgent relief for a proposed party to arbitration and whether the relief should be granted and, if so, in what terms.

The court rejected the jurisdictional challenge and continued the freezing order, subject to Cetelem instituting arbitral proceedings forthwith. It was prepared to grant a mandatory injunction, but required a more restrictive and precise form of order.

1. Jurisdiction. Section 44(3) of the Arbitration Act 1996 permits the court, in an urgent case, to make orders necessary to preserve evidence or assets on the application of a party or proposed party to arbitral proceedings. Following Hiscox Underwriting Ltd v Dickson [2004] EWHC 479, the section is permissive and does not exhaust the court’s supporting powers. It would frustrate the statutory scheme if jurisdiction depended on arbitration having already been commenced.
2. Discretion and arbitration. Interim relief should support, rather than usurp, the arbitral process. The court should not make an order which it knows cannot practically be enforced. Here, the contractual choice of English law and London arbitration, the parties’ cooperation arrangements, the ability to gather documents in Russia and the relevant corporate powers meant that a suitably worded order was not futile or incapable of enforcement.
3. Worldwide-freezing-order argument. Motorola Credit Corporation v Uzan (No 2) [2003] EWCA (Civ) 752 was distinguishable. This dispute had a substantial jurisdictional connection with England through the governing law and agreed arbitral seat.
4. Mandatory order. The exceptional nature of mandatory interim relief did not prevent an order where urgency and fairness required it and refusing relief carried the greater risk of injustice. The order had to identify the required documents and impose reasonable and lawful measures in terms that the defendant could understand and perform. The proposed wording was therefore narrowed, and the provision authorising a third party to sign on behalf of defaulting entities was not retained.
5. The application for privacy was refused because the evidence indicated that someone within the claimant’s group had already informed Reuters. Permission to appeal was refused on the statutory-jurisdiction ground; the defendant was directed to seek the Court of Appeal’s permission on the challenge to the exercise of discretion.

First-instance interlocutory decision. The defendant’s application for permission to appeal was refused on the jurisdiction ground. It was left to the defendant to seek permission from the Court of Appeal on the discretionary challenge.